Fineprint Company (Abridged)

3 Pages Posted: 5 Apr 2010 Last revised: 20 Apr 2018

See all articles by Luann J. Lynch

Luann J. Lynch

University of Virginia - Darden School of Business

Abstract

John Johnson, owner of FinePrint Company, is presented with two opportunities to consider: (1) whether to accept a one-time special printing order, and (2) whether to outsource some of his printing to another printing company. In making his decisions, he must consider the relevance of certain costs, the behavior of those costs, and the extent to which he has capacity constraints.

Excerpt

UVA-C-2298

Sept. 20, 2009

FinePrint Company (Abridged)

John Johnson reflected on both offers he had received in the past couple of days. First, Abbie Jenkins, a friend of Johnson's and the owner of a small company in nearby Keswick, Virginia, had called to see if Johnson's printing company, FinePrint Company, could accommodate a special printing order next month. In addition, Ernest Bradley, the owner of a local one-room printing operation in Charlottesville, Virginia, called SmallPrint Shop, had stopped by to see if FinePrint Company could use some help printing color brochures over the next few months.

Company Background

Johnson's company, FinePrint Company, printed elaborate high-quality color brochures in its facility located in Charlottesville, Virginia. It primarily served other businesses in the central Virginia area, although it did have some clients in southwest Virginia and as far east as the Chesapeake Bay region of the state. Monthly production at its Charlottesville facility was running at around full capacity of 150,000 brochures per month. Johnson owned and managed the company. He employed one sales representative and one printing press operator, although he frequently relied on temporary labor to help in the printing process as needed to accommodate any changes in printing volume. Johnson felt that many of his costs were fixed, but that some costs varied with the number of brochures he printed and sold. Exhibit 1 contains information related to FinePrint's monthly operating costs for the company's current activity level of 150,000 brochures per month.

. . .

Keywords: cost behavior, fixed costs, contribution margin, costs and decision making, outsourcing, capacity

Suggested Citation

Lynch, Luann J., Fineprint Company (Abridged). Darden Case No. UVA-C-2298, Available at SSRN: https://ssrn.com/abstract=1583295

Luann J. Lynch (Contact Author)

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States
434-924-4721 (Phone)
434-243-7677 (Fax)

HOME PAGE: http://www.darden.virginia.edu/faculty/lynch.htm

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